Correlation Between Lyell Immunopharma and Waters

Can any of the company-specific risk be diversified away by investing in both Lyell Immunopharma and Waters at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Lyell Immunopharma and Waters into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lyell Immunopharma and Waters, you can compare the effects of market volatilities on Lyell Immunopharma and Waters and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Lyell Immunopharma with a short position of Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lyell Immunopharma and Waters.

Diversification Opportunities for Lyell Immunopharma and Waters

-0.32

Correlation Coefficient

Lyell Immunopharma  Waters

Very good diversification

The 3 months correlation between Lyell and Waters is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lyell Immunopharma and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters and Lyell Immunopharma is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Lyell Immunopharma are associated (or correlated) with Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of Lyell Immunopharma i.e., Lyell Immunopharma and Waters go up and down completely randomly.

Pair Corralation between Lyell Immunopharma and Waters

Given the investment horizon of 90 days Lyell Immunopharma is expected to generate 2.9 times more return on investment than Waters. However, Lyell Immunopharma is 2.9 times more volatile than Waters. It trades about 0.01 of its potential returns per unit of risk. Waters is currently generating about 0.02 per unit of risk. If you would invest  61.00  in Lyell Immunopharma on December 20, 2024 and sell it today you would lose (3.00) from holding Lyell Immunopharma or give up 4.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Lyell Immunopharma  vs.  Waters

Lyell Immunopharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lyell Immunopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Lyell Immunopharma is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Waters

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Waters are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Waters is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lyell Immunopharma and Waters

The main advantage of trading using opposite Lyell Immunopharma and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lyell Immunopharma position performs unexpectedly, Waters can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Waters will offset losses from the drop in Waters' long position.

The idea behind Lyell Immunopharma and Waters pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.